Almost every aspect of life in the twenty-first century involves the use of electric power. However, most users of electricity do not realize that, before electricity reaches their premises, it travels through a complex network of electric power generation and distribution systems. The complexity of power generation and distribution is frequently underscored by blackouts, such as those that occurred over most of the northeastern United States and Canada on Aug. 14th and 15th of 2003, which make it clear that the various processes and systems involved in the generation and the distribution of electricity require very careful planning.
In the United States, electric power generation and distribution was traditionally highly regulated by federal government agencies, such as the Federal Energy Regulatory Committee (FERC), as well as by utility commissioners of various states. These regulating bodies set performance standards and requirements for the generation and the distribution of electric power for the utility companies (hereinafter referred to as “utilities”) which generated and distributed electric power. For example, these regulating bodies specified the requirements for real power at various points on the electric distribution systems. In response to the specified requirements, the utilities determined how much electricity to produce, where to produce it, and how to distribute it.
Utilities generate electricity using various types of power generators, which may be categorized depending on the energy used to generate electricity, into thermal, nuclear, wind, hydroelectric, etc., generators. Each of these various types of generators operates under different sets of constraints. For example, an output of a thermal generator is a function of the heat generated in a boiler, wherein the heat generated per hour is constrained by the amount of fuel that can be burned per hour. Additionally, the output of the thermal generator may be limited by various environmental regulations that specify the maximum output of certain hazardous gases that can be emitted by the thermal power generator. Similar types of constraints exist with other types of power generating systems.
Once the utilities received the requirements for real power to be delivered, the utilities determined which generation unit to use at what level. In making this determination, the utilities took into consideration the constraints on each of the available power generators. Moreover, to minimize the cost of power generation, the utilities typically tried to find the optimum combination of power generation using any of a number of sophisticated mathematical and forecasting models available for planning the generation of electricity. Specifically, computer programs generally known as economic dispatch programs were available to help utilities make decisions related to the operation of electric generators based on real power requirements.
As is well known, electric power includes both real power, which is given in megawatts (MWs), and reactive power, which is given in mega volt-amperes reactive (MVARs). Because, utilities traditionally received requirements for electric power in real power only, traditional economic dispatch programs determined optimum operating solutions only in terms of real power. As a result, these programs allowed utilities to determine optimal operation of various generators based on a specified real power, but did not take into account the reactive power requirement. However, it is necessary to keep a certain level of reactive power on the electric distribution grids to avoid damage to transformers and other electrical distribution equipments. As a result, utilities still have to generate and distribute at least some reactive power. In the past, because the levels of reactive power were not mandated by the regulators, reactive power levels on grids were maintained mostly based on mutual understandings between various utilities and loosely defined best practices for power generation. Moreover, because the rates charged by utilities for power were traditionally highly regulated, and were generally tied to the cost of producing the electric power, utilities generally did not pay much attention to the cost of generation and delivery of the reactive power, as the utilities could easily pass on the added cost of producing the reactive power to their customers.
However, over the last couple of decades there has been considerable deregulation and restructuring within the electric power industry of the United States, which has substantially increased competition among utilities and made utilities more aware of their cost structures. In particular, due to increased competition, the utilities can no longer automatically charge their customers higher prices because of higher production costs. As a result, utilities have become more conscious of the costs associated with generating and distributing both real electric power and reactive electric power, and are less likely to provide reactive power to properly maintain distribution grids without being adequately compensated.
In this environment, to maintain the necessary level of reactive power on distribution grids, the North American Electric Reliability Council (NERC), a utility industry trade group, has started providing specifications for levels of reactive power to be maintained by utilities. As a result, when a utility is making the determination as to which generator technology to use for generating electricity, the utility has to take into account not only the real power to be produced, but also the reactive power to be produced.
Unfortunately, the task of optimizing the production of both real power and reactive power is highly complex, due to the relationships between the two, and none of the various economic dispatch programs available on the market allows optimizing the production of both real power and reactive power.